It's a standards producer/consumer disconnect. XSLT on XHTML documents was always the Right Way(tm), but XML got such a backlash it never stood a chance once HTML5 landed.
Also, XSLT is horrible.
Also, XSLT is horrible.
That said XML is like violence, if it’s not solving you problems you need to use more.
The idea of producing visual presentation by running XSL-T and then XSL-FO was the kind of thing that makes you think writing TeX macros might be easier.
Hilariously over engineered for the problem users actually wanted to solve (making data driven web pages look pretty).
It's a very natural proclivity of a language designer designing a template language for language X to want to find a way to articulate that template language in that same language X also. I think most engineers can't help but love ideas like that. It's probably the same reason everyone who creates a programming language wants to make a self-hosted compiler for it.
In this case though, XML being a rather verbose and arguably limited semantic markup language for textual documents, it's an extraordinarily unergonomic choice for templating itself (in notable stark contrast to SXML combined with Lisp code, which is an example of homoiconicity between the structure being templated and the templating language works very well).
And Lisp S-expressions are a fine way to model mark up and transformations on markup.
XQuery can do everything XSLT can but with different syntax. XQuery 3 can also handle JSON. It's a clean way to generate well-formed XHTML.